Last week, Amazon announced their shortlist of 20 cities in the US for their HQ2. I personally think this process is just for show at this point. They needed no professional support to get to this list of cities. In fact, they could have gotten 90% of this list by simply cross-referencing NFL cities with international airports.
But Amazon’s process raises a good question for other businesses that use their HQ location as a strategic advantage: what attributes should you look for in an HQ location?
Amazon’s process has done one thing perfectly: it has created a demand for them. No matter what else happens between now and their operational go-live, they will have more job applicants than a typical new company to a market. They will also have an enormous pile of goodwill (unless they screw this up royally and it turns out that they are simply in it for incentive money). These two elements are critical to a business’ long-term success in a market.
Much of a business’ success is dictated by the quality of the talent you can recruit. Good talent reduces your overall cost of delivery because one great finance person is worth three poor finance people (and far less than the cost of those three). The larger your talent and recruiting pools, the more likely you are to land those in-demand A players.
This is a lot of exposition to get to the list of attributes you should look for in an HQ location but it’s important because the selection of a new HQ is as much art as science. Here’s the recipe for success:
- A talent pool that aligns with your overall organizational needs. You want people that understand your business, not just the back office.
- A market that is hospitable to your type of business. A financial company in an industrial town will always feel a bit out of place.
- A cost structure that fits your needs. Don’t go to New York if you aren’t willing to pay for the expensive real estate required to keep up with the Joneses. Don’t go to Huntsville, Alabama if there are no buildings that reflect the type of operation you want to run.
- Do not sacrifice your culture. If you don’t want a Silicon Valley mentality in your workforce, don’t go to Silicon Valley.
- Do not pick a market that is too small. Some companies can get away with dominating a market (Walmart!) but most cannot get away with it. Make sure you have some room to grow even if that means leaving room for competitors to come in behind you.
It’s not a math problem but you can largely model many of these. There’s an art to this process but it requires you to think it all through.